Sunday, March 28, 2010

Really? The NCAA imposed the opposite of affirmative action on its schools and what happened? Did we get less diverse athletic teams? When the NCAA imposed minimum ACT/SAT scores for eligibility for Division I scholarships, black leaders protested. John Thompson, then coach at Georgetown, threatened a boycott. The contention was that the NCAA actions were anti-black and that kids who traditionally found big-time athletics a road out of the ghetto would not be admitted to colleges. We were also told that big-time basketball and football would suffer, being forced to rely on white boys who could not run fast, jump high, and do whatever it was that black boys excelled. Well we are ten years into those standards and along the way the NCAA also imposed minimum standards on the high school core that the athletes had to take and pass. Again, the black folks protested vehemently. Now not only did kids have to “pass” the ACT/SAT they also had to take prescribed courses in math, science and language. We were told that inner city schools did not offer these courses. Joining the black gnashers of teeth were the whites who said that that obviously the NCAA wanted college athletics to be the province of the white elite.

So what happened? Kids that wanted to play big time sports upgraded their curriculums actually studied, passed the courses, prepped for the ACT/SAT and “passed” them. College basketball is still basically the province of black urban kids. College football is still mostly black as well. If there is a diminution in quality it is because kids go early into the pros.

Excuse #2: Black students’ culture dumbs them down

A Berkeley professor once wrote that black high school kids fail to achieve because they are derided as “acting white.” If that is true then why aren’t the athletes prepping for the ACT so they can get a scholarship to college aren’t said to be “acting white”? Kids are using that as an excuse not to study. So be it, those kids are not destined in the first place to be our future leaders. All kids are subject to peer pressure: to do drugs, to do sex, to do alcohol, to do crime. Today’s culture glorifies all of this. This may be the first generation that takes as its role models, those from lower socio-economic status. It is the prison culture – tattoos, baggy pants that hang at the butt (prisoners are not allowed belts), foul language, fouler music, and general thuggery. The girls have the cheap streetwalker influence with the low jeans, short tops, assorted piercings and tattoos in the small of their backs. I call it the vulgar generation.

So what? Each generation is blessed with its losers. And we seem to be letting this generation’s get all the headlines. Let them fail. The ones that resist will achieve despite the pressures and that will make them great. There are plenty of those. They will overcome all the poverty pimps who want to blame whitey.

One of the reasons I joined Bob Woodson’s board at the National Center for Neighborhood Enterprise is that Bob is a no excuses person. He believes that we are responsible for our own actions. Black crime, illegitimacy, poverty (mainly single women head of households) are caused by us, fostered by us, excused by us, and must be addressed and fixed by us. There is considerable evidence that the War on Poverty made us worse off. Economics says that if you provide disincentives, then people will take advantage of it. It gave rise to the poverty industry that is motivated to keep the poor poor. I am embarrassed by today’s black leaders. I only hear complaints. I only hear “throw more money at it (and at me).” I have never heard one of them offer up a tangible concrete solution to address the problems. I lost all respect for Jesse Jackson who while lambasting school vouchers (because he is in bed with the teachers unions) sent his children to St. Catherines and St. Albans in DC – private schools with ivy-league tuitions. Why didn’t he send his kids to the DC public schools? Yet instead of excoriating him, the liberals gave him a pass. I lost all respect for the NAACP when they named Kweisi Mfume as president. Its ok for him to be an elected official with his multitude of bastard children, but to represent the oldest black civil rights institution is an embarrassment. At least these so-called leaders are representing an ever decreasing and more isolated number of people. Blacks are becoming marginalized and soon will be just like Native Americans on their subsidized reservations.

I am still waiting for the first idea to come from the left as to how to improve the education of black kids. Rather they do nothing but make excuses. Isn’t it interesting that the ideas come from conservatives who are then skewered by the liberals – who only react and do not initiate.

OK back to the NCAA. What would happen if affirmative action disappeared tomorrow at the nation’s colleges? Would we be worse off? Or would the achievers be motivated to achieve? I have had black students that I have chastised for their lack of performance say “it doesn’t matter – I’ll still get into (medical school, law school, fill in the blank) because I am black.” Would they say this if there were no affirmative action? That’s an empirical question.

Excuse #3: Affirmative action results in black students having an inferiority complex

This is nonsense. Affirmative action may get the students admitted but it is not how they stay there. What should be done at the undergraduate level? Admissions is at best an inexact art. What criteria should be used for admission? Obvious a private college is a different case than a state one. A state university has an obligation to the residents of the state. How do you define that obligation? Should it reject white citizens in favor of black ones? If you say yes, then to what extent? Should it have a student population that mirrors the state’s racial composition? Or should it mirror the racial composition of students who graduate from its high schools? I have actually heard this point argued seriously. Admissions based on ability is somehow racist. Thus, they argue for affirmative action. I then say ”should the university recruit athletes from out of state – regardless of color – to the exclusion of athletes within state? Should the athletic programs reflect the racial composition of the state as well?” If you advocate that one, then the race pimps would scream discrimination because in the case of athletics having teams that are based on ability and disproportionately black is somehow acceptable.

My solution would be open admissions to all state high school graduates. The university would not have to lower its standards. The freshman year would be one of weeding out. All students would take language, history, math and science. Those that can’t deal with the tough curriculum, or the large classes, or the impersonal treatment will leave. They may end up at JUCOs or lesser universities or they may not. But that’s life. We should have no obligation to assure their success. That is their responsibility.

As it stands now affirmative action is the continuing manifestation of the marginalization of black (native) Americans. It’s not just our becoming the second largest minority. But it’s the reaction of our so-called leaders who fear the loss of power and the loss of government handouts. I am embarrassed that our leaders want our people to continue to be wards of the state. Our undergraduates add to the marginalization with their black dorms, black graduations with their kinte cloths, black proms, et al. Don’t misunderstand: cultural awareness is good. All cultures should be included in mainstream learning but not separated from it. I remember asking my Mom why we had a black history week (in those days) and she said “its because every week is white history week”. However, my beef with history has always been that it is wrong. I had problems with its content in high school and especially in college where I challenged by economic history prof and got a “C” for my insubordination. The history I have read is written by socialists, leftists, are apologists for the failures of the left and hate capitalism and its successes. There is a reason why most blacks in this country are not poor and are educated. It is because of capitalism and the unique freedoms of this country.

We are somehow under the incorrect impression that diversity makes this country great. That is garbage. This country is great because of freedom and capitalism. Did you ever wonder why white men willingly gave up power (to blacks and to women)? Its because the Constitution made them do it. Freedom. Why have blacks achieved in this country? Capitalism. Someone said that socialism has been discredited everywhere in the world except on university campuses. However, this is a truly rare country where we, the descendants of slaves, can teach the descendants of the masters.

Consider this: why are we not Bosnia or Northern Ireland or Lebanon or Nigeria? Why is it that people who openly kill each other elsewhere in the world are in this country coexisting peacefully? I remember when the (white southern male) courts forced the (white southern male dominated) University of Georgia to admit its first blacks, there was a riot and the University expelled the blacks for “their own safety.” The courts immediately ordered their reinstatement. The governor (white southern male) called out the national guard (white southern male) and there were stories that some of the rednecks who were rioting the day before put on their uniforms and enforced the peace the following day: “Don’t come across that line baby brother or I’ll be forced to hit you upside your head with this billy stick.” Only in America. Again. It’s the Constitution and the respect for the law – even by rednecks. I actually felt sorry for Jim Meredith who was admitted to Ole Miss the same quarter I was admitted to Georgia. He had to have two state troopers assigned to be with him at all times on campus. I have always wondered if they graduated too.

However, ultimately all this stuff doesn’t really matter. Achievers will still achieve. The great unwashed will remain unwashed. Pimps will still pimp. The minority of the minority will still be put forth as the norm, despite all the statistics to the contrary. Nonetheless, we should never let the poverty/race industry dominate the conversation. We know the truth and to continue to let the exception get promulgated as the rule does us all a disservice.

Monday, March 22, 2010

Pardon me if I did not appreciate Nancy Pelosi and the triumphant democrats linking arms and proclaiming health care insurance "reform" as the new civil rights bill. I saw it just the opposite. Instead of liberating millions of fellow Americans from the shackles imposed by the majority, health care "reform" enslaves millions of Americans to the shackles imposed by the democrats in the congress. This is the opposite of what Madison and the founding fathers envisioned. They created a republican form of government with a senate to protect us from the tyranny of the majority. Freedom is not mandating that all Americans purchase a specific good - whether they need it or not - or else the IRS will visit you and the government will garnish your wages. Freedom is not the reduction of choice while forcing you into the arms of the government. Freedom is not limiting access to new drugs and procedures because they cost too much. But go look at medicare, medicaid and the VA and see that their choices and access are limited. Freedom is not driving private businesses out of business because of the imposition of costs. Yet this is what mandating covering preexisting conditions without raising the costs of premiums. Remember that insurance makes sense because you pay in premiums to be used in case you need them. It is not just showing up and saying "pay me even though I haven't paid in any premiums". That drives companies out of business. And because the democrats and particularly the president hate profits - hence the railing at obscene insurance companies profits even though they are low by any standards - they welcome the government takeover. Yet everywhere the government operates a business it does it at a loss and do it inefficiently as well. Margaret Thatcher said that socialism dies because if runs out of the people's money to spend. Well on the way, this government is going to set Americans against Americans. It will have this monster paid for by taxing only one group of its citizens not all. It has one group taxed to provide handouts to the others. One reason why the congressional black caucus with the exception of Artur Davis of Alabama and why the hispanic caucus voted for the bill is that they think their constituents in the main will be on the receiving end for the handouts rather than on the paying end. This will then start the country moving backwards to a racial/ethnic divide. We have made enormous progress but if the result of this legislation is to cast blacks and latinos as those with their hands out and whites as those who are paying for it (even though more whites will be on the receiving end) the those ugly racial/ethic divisions will once again divide us. Such will be tragic since the division should be those who take away our freedoms and enslave all of us versus all of the rest of us who love freedom.

Sunday, March 14, 2010

Am I the only one who has noticed that although Fox News wears the mantle of being "conservative" and CNN is "liberal" that it seems like for a woman to be on Fox News, she has to have on a short dress? All of their women guest experts apparently have to wear a short dress to get on the air. All of their anchors that sit on the couch have the barbie doll look - blonde and short dresses. Last week poor Dana Perino, George Bush's press secretary had on a short dress with a slit up to her thigh. On the other hand, the women on CNN at least look professional. I tune into Fox at 6AM when I get on the treadmill and will switch over to Headline News if the barbie doll female anchorette has decided to dress like a cheerleader. I have sent them several emails protesting their appearance but of course none has deigned to reply. Since they like short poems to start the day, I sent them the following when Gretchen had on a low cut blouse with her usual obligatory short dress: Dear Fox and Friends, No prude am I but when I start my morning I would like to do so without all the cleavage and thigh.

The Federal Reserve has just sent mixed signals. It raised the discount rate by 25 basis points to 0.50 percent and yet told Congress the very next week that it plans to leave its Fed funds rate unchanged at 0.25 percent.

The discount rate is what the Fed charges those who want to borrow at its Discount Window for liquidity purposes. This rate usually is 1 percent above the Fed funds rate - the rate banks charge other banks on overnight loans. When the financial crisis was at its peak, the Fed lowered the discount rate, and Discount Window borrowings peaked at $100 billion.

Since the crisis has subsided, loans have fallen to $10 billion, so the Fed decided there was no need to provide as much cheap borrowing to the banks.

However, Fed Discount Window loans, coupled with its asset-backed securities purchases of mortgage-backed securities and commercial paper, have caused the monetary base (currency plus bank reserves) to increase from $813 billion in 2006 to $2 trillion in December.

Although some people have claimed that the Fed has doubled the money supply, that is not true.

The most commonly used definition of money is M2, which is checkable deposits, currency in the hands of the public, and small time and savings deposits. M2 has increased from $6.6 trillion to $8.5 trillion. But the base is the money supply's fuel.

Banks create money by lending out of excess reserves, and the banks now are sitting on $1 trillion in excess reserves. If demand in the economy recovers, and the banks lend out the money, the result will be an explosion in the money supply and in inflation.

The Fed says it is not worried because it can discourage bank lending by paying more interest on excess reserves. Others, including me, are skeptical.

Some have suggested that the Fed double the reserve requirement from 10 percent to 20 percent, which lessens the ability of banks to generate money by forcing them to hold more reserves. That is a very bad idea. The last time the Fed tried this was in 1936, which led to banks curtailing lending to rebuild their reserves. The result was the 1937 return to depression.

No. A better idea would be for the Fed to raise permanently the reserve requirement to 100 percent. Of course the banks could not lend either. Rather this would create what Milton Friedman called the "narrow bank." Lending would then be conducted out of a subsidiary in the bank's holding company, which would borrow the money it lends, just like finance companies, mortgage banking companies, insurance companies and investment bankers.

This way the banks could not generate money and destabilize the economy. Rather, money creation and destruction would rest entirely with the Fed - where it belongs.

Dr. Harold Black is the James F. Smith Jr. Professor of Finance at the University of Tennessee. He can be reached at hblack@utk.edu.

Monday, March 8, 2010

Am I the only one who has noticed that the health care debate has nothing to do about health care? Rather it is a debate over insurance coverage. The democrats want to extend medical insurance to the 30 million uninsured - regardless of whether they actually want the insurance or not. Since roughly half of the uninsured could purchase insurance but choose to opt out, the democrats want to mandate it. Since insurance is a product, this is akin to the democrats mandating that all must purchase any other product, like Jelly Bellies. The reason why they want it mandated is that all the young people who currently opt out are needed to fund the subsidies embodied in the proposed legislation. It is almost too bad that beginning next year I will be in the government program, Medicare. If I were younger I would sue the government if such legislation passed. If the Constitution allows this taking of private property through confiscation of income to pay for a "good" then we are all in serious trouble.

It is also interesting to listen to all the rhetoric. At the president's summit it seemed that every democrat had some sob story about health care being denied by an insurance company. I was disappointed that the republicans did not counter with sob stories about seniors being denied by Medicare or some veteran denied a drug by the VA. Indeed, although the numbers are dated, in 2008 Medicare had higher denial rates than an private insurer. Of course that is probably because Medicare's patients are older, but that makes the case even more compelling.

Also what about those dramatic increases in health premiums that the president is constantly railing about? I thought that since states regulated insurance, that they had rate commissions to approve or reject rate increases. It seems that the rate increase often cited as outrageous was approved by the rate commission in California! So consider this: the reason why insurance is so expensive is because states refuse to allow the purchase of insurance across state lines which limits competition. It is ironic that the main problems cited with insurance are due to (state) government regulation not because of private insurers being rapacious. As I have written before, if the government wants to lower the cost of insurance they should pass an act akin to Reigel-Neal which prohibited the states from prohibiting branching across state lines. Absent that, why haven't consumer groups started applying pressure to their state legislatures to enact laws to allow interstate commerce in insurance? It happened before in banking prior to Reigel-Neal and it could happen again once people really learned what the truth is.

Sunday, March 7, 2010

The federal government should be limited to 20% of the national economy every year.

By JEB HENSARLING AND MIKE PENCE Fiscal storm clouds are upon us. In five years, federal spending has skyrocketed to 24.7% from 19.9% of our economy. That's the highest level since World War II. Borrowing has ballooned the national debt to $11.9 trillion from $7.3 trillion, a five-year increase equal to the accumulation of debt between President George Washington and President Bill Clinton.Unfortunately, the long-term fiscal picture is worse. As the Baby Boom generation retires and the cost of health care continues to escalate, entitlement programs will cause federal spending to rise to 40% of our economy, double its post-World War II average. This is assuming that spending does not increase even further, an assumption that the trillion-dollar "stimulus" bill and the 84% increase in nondefense discretionary spending President Obama signed into law argues against. The situation is dire, but don't take our word for it. "U.S. fiscal policy is on an unsustainable path to an extent that cannot be solved by minor tinkering," Congressional Budget Office Director Doug Elmendorf said recently. Former Comptroller General David Walker called the rising costs of government entitlements a "fiscal cancer" that threaten "catastrophic consequences for our country." Can we tax our way out of this problem? No.In order to pay for what we are on track to spend under current law, taxes would have to double. This would crush our economy and condemn future generations to a far lower standard of living. That is not an option.Can we grow our way out? Unfortunately, no. Although pro-growth policies like simplifying the tax code and lowering rates are critical components of any solution, they alone are insufficient. Mr. Walker estimated it would take double-digit economic growth every year for the next 75 years in order to close the fiscal gap.Can we continue to borrow our way out of the problem? Borrowing of that magnitude would drive up interest rates to unimaginable levels, crowding out borrowing opportunities for families and businesses. As Greece and other European countries like Spain and Portugal face default for their excess spending, and China lectures us on our fiscal irresponsibility, the idea of borrowing at still higher levels seems inconceivable.Without spending discipline only one option remains: monetizing the debt, also known as inflation. Although Federal Reserve Chairman Ben Bernanke has repeatedly said that this will not happen on his watch, many think it's inevitable. If we do monetize the debt, inflation could be so high we may look back upon the Carter era with nostalgia. Winston Churchill once said that "Americans can always be trusted to do the right thing, once all other possibilities have been exhausted." We've exhausted the possibilities. Now it's time to do the right thing. That is why we are proposing a Spending Limit Amendment to the Constitution. This amendment would limit spending to one-fifth of the economy (our historical spending average since World War II). The limit could only be waived by a declaration of war or by a two-thirds congressional vote. As with other constitutional amendments, Congress would be given the authority to enforce and implement it. But for the first time, the federal government would have a limit on its size and scope. The Spending Limit Amendment does not promise a particular spending plan about what programs to restrain and by how much. Rather, it puts a legal constraint on lawmakers present and future.Some will say it should not be done now. But if not now, when? Our spending problems are tantamount to generational theft and fundamentally alter the American ethic. We cannot have both unlimited government and unlimited opportunity. This amendment is an effort to allow "We the People" the opportunity to fundamentally define the size of our government. Passing it would save future generations from lives of fewer opportunities and less freedom.Mr. Hensarling, a Republican, is a congressman from Texas. Mr. Pence, a Republican, is a congressman from Indiana. Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

The Central Falls school district in Rhode Island voted to fire all 93 teachers and administrators at the Central Falls High School. The school chronically underperforms and is rated among the worse performing in the state. It turns out that the firings are called for under Federal no child left behind guidelines. Under new federal requirements for school reform, low-performing schools have several options. One is called the transformation model, which includes a series of changes that teachers agree to adopt. Here the superintendent tried to negotiate with the union changes that included according to CNN "work a longer school day of seven hours and tutor students weekly for one hour outside school time. She proposed teachers have lunch with students often, meet for 90 minutes every week to discuss education and set aside two weeks during summer break for paid professional development." When the negotiations on those changes failed at Central Falls High, the superintendent switched to another option: the turnaround model, which means firing every teacher at the troubled school.

First, I was stunned that teacher firings were actually called for under federal guidelines. Second, I was also stunned that this would actually occur. Third, I was shocked beyond words when the Secretary of Education Arne Duncan in the face of the union saying that the firings were "immoral, illegal, unjust, irresponsible, disgraceful and disrespectful," said that education officials are "showing courage and doing the right thing for kids." "This is hard work and these are tough decisions, but students only have one chance for an education," Duncan said, adding that "when schools continue to struggle we have a collective obligation to take action." Fourth, I was equally stunned when Arne Duncan has kept his job, despite the oft-cited patronage of the democrats and the teachers unions.

What all of this reminded me of is the recently released survey by the Intercollegiate Studies Institute that shows that in 16 colleges - including Princeton and Harvard - incoming freshman tested higher than seniors on aptitude tests. The author of the survey calls this "negative learning". I am not surprised. I teach college seniors and test using essays, short answers and problems. I take off a point for a misspelled word and three points if they misspell five words listed on the syllabus (receive, yield, principal, guarantee and separate). Despite my warnings, students continue to misspell these words through four examinations. Most cannot write - having told me that they have not had to write an essay since freshman composition. Many cannot do basic mathematics - I do not allow calculators on my tests. One student had no idea who Joe Biden is. Few know history. Even fewer have read the Constitution. I showed them an admissions exam for high school given in 1885 published in the Wall Street Journal as "Sharpen your pencil" and none could pass it. Maybe we should also fire the professors.

As many of you know, I am a global warming skeptic. This skepticism has probably generated more negative responses than I have received on all other issues combined. It is as though I attacked someone's religion. But of course I did. I became skeptical when global warming was proclaimed as "settled science" by its adherents. As I have pointed out before, there is no such thing as "settled science". Those who proclaim it are doing so in order to stifle inquiry and criticism. One would think after the revelations in the hacked emails at East Anglia, the resignation of the center's director, the admission that he "lost" the confirming data (one does not "lose" data!), the admission by him that the earth has actually been cooling, the finding that the UN report that is the basis for governments pushing global warming is full of fabrications and speculations not supported by evidence, that journal editors have been rejecting articles that find other conclusions and on and on and on, that the adherents would now be saying that we should reassess the evidence. But no. They are digging in their heels. If you are interested in reading the details of all this and more about the global warming hype go to climatedepot.com. My esteemed university that has awarded an honorary degree to Dolly Parton is now awarding one to Al Gore. “Vice President Gore’s career has been marked by visionary leadership, and his work has quite literally changed our planet for the better,” said UT Knoxville Chancellor Jimmy G. Cheek. Well what do you expected from a grown man named "Jimmy"?

About Me

Harold A. Black is professor emeritus in the Department of Finance, University of Tennessee, Knoxville having retired after 24 years of service. He has served on the faculties of American University, Howard University, the University of North Carolina - Chapel Hill and the University of Florida. His government service includes the Office of the Comptroller of the Currency and as a Board Member of the National Credit Union Administration. He also has served on the boards of directors Home Savings of America and its parent company, H. F. Ahmanson & Co., Irwindale, California prior to its merger with Washington Mutual Savings Bank, on the board of New Century Financial Corporation, Irvine, California, then the nation’s largest real estate investment trust and as director and later chairman of the Nashville Branch of the Federal Reserve Bank of Atlanta. He writes an occasional article for the Knoxville News-Sentinel at http://www.knoxnews.com/staff/dr-harold-black/. His web page is haroldablackphd.com